Employers and the critics of labour regulation have been demanding reforms in labour laws and governance (inspection and compliance) procedures ever since the economic reforms, initiated in 1991, gathered momentum. There were two basic demands — rationalising and synthesising numerous labour laws (around 40 at the Central level) into four or five neat Codes, and introducing amendments to provide flexibility to employers in terms of employment and its composition (like freedom to employ contract labour of employees on fixed term).
The Second National Commission on Labour (SNCL) strongly recommended codification of Central labour laws. As a result, during its first tenure, the National Democratic Alliance (NDA) government, under the leadership of Narendra Modi, drafted four Codes — on Wages, Industrial Relations, Social Security and Occupational Safety and Health and Working Conditions — and presented it in the Lok Sabha in 2017.
It was referred to the Parliamentary Standing Committee which submitted its report in December 2018. After the landslide victory this year, NDA 2.0 tabled the Bill again, amidst protests by Central and other trade unions.
Bill lacks social vision
The Code on Wages Bill, 2019 was passed by both Houses of Parliament last week. While the Code has some positive measures, such as universalising minimum wages and timely payment of wages for all workers, it suffers from several infirmities and inadequacies.
While universalising minimum wages, the Code has stipulated a floor level minimum wage at both national and zonal levels which will depress the wage rate. Contrary to claims made by the government, the Code has diluted the measures provisions concerning gender justice by removing some important provisions relating to post-recruitment rights of women employees. It lacks social vision as it is deficient on gender-based equity and does not take into consideration other forms of discrimination based on social origin (caste).
No systematic plan
It has ignored or failed to fully implement important recommendations of the Parliamentary Standing Committee, such as strengthening penalties, concretely defining the hours of work and expending gender-equity rights. By leaving the criteria for determination of wages and work hours to the State governments, the Code has given wide scope for possibilities of differential wage, hours of work and over-time standards. This may even trigger a race to the bottom of labour standards, given the intense competition for capital by the States.
The Centre has not put in place any credible scheme for effective and widespread implementation of universal minimum wages. This raises serious concerns as the minimum wage law was the most covered law in the past as it covered agriculture but was the least effectively implemented of all labour laws.
Now, with universalisation, which means the legislation covers crores of workers, how will the government ensure that even the conservatively determined minimum wage will be implemented? These are good promises as it leads to labour welfare. But the government gives rights by the right hand and weakens them by the left. The legislation is a missed opportunity as it could have factored in the ground realities in the labour market to meaningfully expand labour rights.
(The writer is a professor at XLRI, Jamshedpur.)